Things that are okay for a car dealer to do: charge a buyer seeking financing a different rate based on his or her credit history. Things that are completely not okay for a car dealer to do: charge a buyer seeking financing a different rate based on his or her race. And yet they just keep doing it anyway.

Car dealers have a nasty and pernicious habit of charging black and Latino customers higher rates than white ones, a study from the Center for Responsible Lending has found. The full report (PDF) delves into the research, methodology, and findings.

It’s not a matter of one group of buyers being less savvy shoppers than another group: white buyers were actually the least likely to try to negotiate the terms of a loan, with only 22% of white buyers giving it a go. In contrast, 32% of black buyers and 39% of Latino buyers negotiated their interest rates.

Earlier research cited in the report found that the race-based discrepancies persist when controlling responses for customers’ credit rating–and that they disappear when buyers are shopping on the internet, rather than in-person.

So if customers are shopping around equally, shoppers of color are negotiating more often than their white counterparts, and credit background isn’t the issue, then that doesn’t start to leave many other variables.

In an understated way, the CRL says that yes, racial discrimination is the problem:

[I]f consumers of color negotiate and shop around just as much as their white counterparts and still experience pricing disparities, it raises the possibility that other factors at the dealership prevent the car financing process from working the same for all consumers.

And:

With racial disparities in dealer interest rate pricing found in several reports, our research shows the possibility of outside factors preventing a level playing field for all consumers. This new research supports the likelihood that dealer practices, such as interest rate markups, have a discriminatory impact on borrowers of color.

Non-white borrowers also received “misleading information” from car dealers at a much higher rate.

The report compared the racial discrimination present in car loans to that present in the mortgage industry, which the CFPB and Department of Justice have investigated in recent years.

So how to solve the problem? The CRL report suggests adding a few new regulations to car dealerships:

A rule “prohibiting dealer compensation that varies based on the interest rate or other material terms of the loan, other than the loan’s principal balance”

A rule “requir[ing] dealers to disclose the actual costs of every add-on product sold during the financing process and to reveal the cost of the car without add-on products,” and

Regulation that “should prohibit dealers from representing that the buyer is required to purchase ancillary products in order to obtain financing.”

Regulation changes to make car salesmen more honest sounds like a good idea all around–especially for those buyers they’ve been misleading the most.

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I hate it when rules are suggested that make mild alterations to an existing system which only further convolute the problems with that existing system and only serve to push people already familiar to find ways of circumventing the recently altered system. Think instead of the possibility of looking at the overall system and the original motivation for participating in the first place.

A few examples:
Dean Kamen was asked to fix some design problems with a medical pump. Instead of looking at what was currently used and making alterations to the existing design he looked at the original problem and his solution cost pennies on the dollar of what the previous systems ran, with much higher reliability and lifetime. He did the same thing when he invented a wheelchair that could climb stairs, no additional hardware required. The resultant technology was used in creating the Segway.

Problem: health insurance costs too much in America. Solution: force everyone to participate in the system. That’s like looking at people drowning in a pool and suggesting that everyone else jump in as well.

Another problem: car dealerships are biased, except online. Proposed solution: make regulations so that they’re not biased anymore. B.S.

My solution (and something I hope will happen in the next decade): allow people to purchase cars online directly from the manufacturer. Stop with this dealership model where too many use an outdated 80s feeling, pushy sales tactics. Tesla got North Carolina to allow them to do direct online sales. When I bought a car last year I did all of my research online and went dealership to dealership wasting my time with high-pressure sales tactics with car salesmen who weren’t interested in building a relationship where I’d be likely to purchase from them in the future, but followed the greedy “screw him over now” model of sales and didn’t get anything from me. Luckily enough places put their inventory online that I was able to find a place where I could find a car I was happy with in half an hour of setting foot on the lot. Problem? It still took 5 hours to finish buying the car! I’d have preferred doing everything online, and I’d be happy to participate in getting systems in place to properly vett the car to make an online purchase safe.

TL;DR
Instead of regulating an existing ridiculous solution to a problem, find a better solution. My suggestion is to make purchasing a car online easy without needing to go through a dealership at all.

Problem: health insurance costs too much in America. Solution: force everyone to participate in the system. That’s like looking at people drowning in a pool and suggesting that everyone else jump in as well.

1) The requirement to purchase insurance or pay a penalty is not the sole solution the Affordable Care Act offers to solve the problem of health care in this country. You’d have to be an idiot to look at the ACA and think it consists of just this one provision.

2) The “pay-or-play” provision is designed to address one particular part of the problem: adverse selection. Left to their own devices, only people who know they need health insurance will buy it. Those who are young, healthy, with no known genetic or other predisposition to illness and who have no dependents tend not to buy it. Since insurance is about spreading the risk over large groups of people, getting that latter group into the risk pool is essential if the ACA is to work. In nations with national health care services or with single-payer systems, everyone is already in the pool by virtue of paying taxes. In a system that relies on private insurance companies, a mandate is unavoidable.

3) There was and is a better solution to the health care problem than the ACA. It’s called single-payer. It never had a chance of getting past the Republicans in Congress.